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Category: Dialog

Late last year, Dialog Semiconductor admitted that Apple could build its own power management chips for future iPhones, and no longer rely on the British-based chipmaker for such technology. This weekend, Dialog CEO Jalal Bagherli provided further details on this topic, now expecting Apple to use Dialog chips for "a significant proportion of its devices" in 2019 and 2020 (via Reuters).

When Dialog admitted that Apple could be working on building its own chips, it said there was no risk to its existing supply deals for 2018, and that the company was already in advanced stages of working with Apple on designing "2019-style products" that could lead to commercial contracts by this month. In regards to the 2018 contract, Bagherli said, "Negotiations over that chip are still ongoing. But we expect to deliver a chip design for testing in the customer’s system in the second half of the year."

“Apple at the start of the year commissioned us with the design of chips for many devices for 2019 and 2020,” weekly Euro am Sonntag quoted Bagherli as saying in an interview published on Saturday, without providing details.

Over the past year, Dialog's stock is said to have lost "more than half of its value" on the sole concern of the company losing business from Apple. According to analysts, over 50 percent of Dialog's revenue comes from supplying Apple with power management integrated circuits -- a technology that many believe Apple now has the ability to create in-house.

Rumors of Apple developing its own power management chips began with a prediction by Bankhaus Lampe analyst Karsten Iltgen last spring, who said that Apple would at least cut back on Dialog's supply of the chips for future iPhones. Then, in November, Nikkeicorroborated that prediction in a report that stated Apple would replace half of the main power management chips for iPhones with its own by 2019.

The same report claimed that Apple's chip will be "the most advanced in the industry," with processing abilities that allow future iPhones to "better monitor and control power consumption." If these rumors turn out to be true, Apple could transition to supply all of the power management chips for its iPhones in 2021 and beyond.

Apple has confirmed a similar shift in creating its own technology for the iPhone's graphics processing chips, ending a reliance on Imagination Technology's chips by 2019.

Dialog Semiconductor admitted on Monday that Apple, its top customer, could build its own power management chips for future iPhones without relying on the British-based chipmaker (via Reuters). The comments saw Dialog shares tumble as much as 19 percent, despite the firm claiming there was no risk to its existing supply deals in 2018.

Dialog said it was already in the advanced stages of working with Apple on designing "2019-type products" that could lead to commercial contracts by next March.

"Our position remains that we have seen no material change to our ongoing relationship with Apple Inc," Chief Executive Jalal Bagherli told investors on a conference call.

However, the company acknowledged for the first time that "Apple has the resources and capability to internally design a PMIC and could potentially do so in the next few years".

A report last week claiming Apple would design its own power management chips as early as 2018 came as a serious blow for Dialog, which exclusively designs the current main power management chip for iPhone, iPad, and Apple Watch models. Apple reportedly accounted for nearly three quarters of Dialog Semiconductor's revenue in 2016.

Dialog's PMIC chip controls an iPhone's battery, including charging capabilities and energy consumption. Apple's own design will supposedly be "the most advanced in the industry", according to Nikkei Asian Review, and could enable future iPhones to have a better balance between performance and battery consumption. Taiwanese supplier TSMC will be the exclusive manufacturer of Apple's in-house power management chip, according to the report.

Since last week's report, Dialog shares have lost nearly a third of their value. At one point this morning they were down 15.2 percent at 26.47 euros ($31.38), according to Reuters.

Bagherli said Apple's feedback so far on 2019 product plans had been "very good" and that he expected to have more clarity by March on the terms of new business from Apple for 2019. Dialog would update investors when it had more details, he said.

Semiconductor suppliers are typically barred by Apple from revealing their supply relationships. Dialog, which has previously declined to name Apple, referring to it only obliquely as its "largest customer" or its "main business", said it had received a special dispensation from Apple to mention it.

Dialog emphasized that it had no reason to believe its 2018 business with Apple would be affected if Apple chose to design its own chips, but acknowledged that it would need to meet the company's "technology, quality, price, and volume expectations" if it wanted to remain a key supplier.

Dialog Semiconductor may turn out to be the second large British company to lose major business from Apple with the next couple of years. In April, Imagination Technologies shares plunged after Apple informed the firm it plans to stop using its PowerVR graphics technology in its devices by mid-2019.

Apple is designing its own power management chips for use in iPhones within the next two years, according to Nikkei Asian Review.

Apple's new in-house power management chip would be the most advanced in the industry, according to the sources, and could have processing capabilities that allow it to better monitor and control power consumption among various components. That means iPhone users could expect devices capable of delivering better performance on lower power consumption.

Apple plans to replace around half of the main power management chips that go into iPhones with its own as early as 2018, but the transition could be delayed until 2019, according to anonymous sources cited in the report.

If the report is accurate, it could be a serious blow for Dialog Semiconductor, the British company that exclusively designs the current main power management chip for iPhone, iPad, and Apple Watch models. Apple reportedly accounted for nearly three quarters of Dialog Semiconductor's revenue in 2016.

The main power management chip controls an iPhone's battery, including charging capabilities and energy consumption. Apple's in-house version will supposedly be "the most advanced in the industry," which could pave the way for future iPhone models to have a better performance-to-battery life balance.

Taiwanese supplier TSMC will be the exclusive manufacturer of Apple's in-house power management chip, according to the report.

Today's report corroborates a prediction by Bankhaus Lampe analyst Karsten Iltgen, who earlier this year said that Apple will at least partially cut back on Dialog Semiconductor's supply of power management chips for future iPhones. Iltgen said Apple already has engineers working on the chips in California and Germany.

Dialog responded to the report with a statement claiming that "business relationships are in line with the normal course of business."

Dialog Semiconductor could be the second large British company to lose significant business from Apple within the next year or two. Imagination Technologies shares plunged after Apple informed the firm that it plans to stop using its PowerVR graphics technology in its devices within two years.

Dialog Semiconductor shares plunged to their lowest price in over 16 years on Monday, after an industry analyst predicted Apple will drop the supplier and move to its own in-house power management chips for iPhones by 2019.

The prediction comes from analyst Karsten Iltgen at German investment bank Bankhaus Lampe, who said that Apple will at the very least cut back to some degree on Dialog's supply of power management chips for the iPhone, according to a research note obtained by Bloomberg.

“There is strong evidence that Apple is developing its own power-management integrated circuits and intends to replace the chip made by Dialog at least in part,” Karsten Iltgen, analyst at Bankhaus Lampe, said in a research note published Tuesday. A shift to Apple developing its own chips in-house is unlikely in the short term, he said.

“We believe that Apple is setting up power-management design centers in Munich and California,” said Iltgen. “We hear from the industry that about 80 engineers at Apple are already working on a PMIC with specific plans to employ it in the iPhone by as early as 2019.”

According to Iltgen, Apple is setting up its own power management chip design centers in Munich and California, and up to 80 Apple engineers are said to already be working on its own PMIC (power management integrated circuit) component. However, he said Apple dropping Dialog "is unlikely in the short term."

Dialog's website says its integrated power management component results in up to 30% longer battery life:

These single chip solutions reduce energy usage and provide a simple, yet flexible, design at a lower cost. Typical usage tests show our Power Management Integrated Circuits (PMICs) are able to decrease the power consumption of a portable device by up to 30%.

The analyst noted that Apple has steadily hired engineers from the United Kingdom-based Dialog over the past year, from the chipmaker's pool of about 1,300 engineers, but a person familiar with the situation noted that "it isn't unusual" to see employees flowing between Apple and its supplier.

If Apple does make the same decision with Dialog Semiconductor as it did with Imagination Technologies, the former company could see as much as three quarters of its business gone over the next few years, as it's believed that Dialog gets as much as 74 percent of its sales from Apple.

Some analysts don't believe that it will ever come to that and disagree with Iltgen's prediction, as Barclays analyst Andrew Gardiner recently mentioned in a research note that he does "not see [Dialog] remotely in a similar position" as Imagination. Dialog shares remained down around 16 percent on Tuesday.

Not everyone agrees that Dialog is at risk. “We do not see them remotely in a similar position," said Andrew Gardiner, an analyst at Barclays Plc, in a research note. "We acknowledge Apple’s continued hiring of engineers, in power management and elsewhere, but an additional 80 engineers hired in this area pales in comparison to the over 1,300 engineers Dialog employed at the end of last year."

Apple supplier Dialog Semiconductor recently made a $10 million investment in Energous, a company that's developing long-range wireless charging techniques and has been rumored to be working with Apple in the past, reports Fast Company.

According to Energous CEO Steve Rizzone, going forward, all Energous technology will be sold under the Dialog brand. Dialog makes power management chips and is said to get as much as three quarters of its business from Apple.

Energous has developed WattUp, an emerging wireless charging technology that uses radio frequencies to charge devices from up to 15 feet away. There's been no concrete proof that Energous has partnered with Apple in any way, but in 2015, Energous inked a deal with an unnamed consumer electronics company, and speculation has suggested it could be Apple.

The deal between Energous and known Apple supplier Dialog doesn't add any further evidence towards rumors of a partnership between Apple and Energous, but as Fast Company points out, Dialog's resources would make such a partnership more viable. Through Dialog, Energous now has access to Apple, knowledge of how Apple's supply chain works, and an inside edge on how to establish a deal with the Cupertino company.

But if Energous were trying to get into a position to supply technology to Apple, it couldn't have made a better move than tucking itself under Dialog's wing. [...]

On its own, Energous is probably too small to be an Apple supplier. Apple suppliers have to be large enough to reliably supply parts at Apple's huge scale. Dialog obviously already has that capacity. With the Energous technology basically being folded into the Dialog structure, all of a sudden Energous has it too.

Rumors suggest Apple is planning to integrate some kind of long-range wireless charging technology into the iPhone 8, set to be released in 2017. Long-range wireless charging is superior to many existing wireless charging methods because it does not require devices to be close to a charging source or mat, but there are also challenges to overcome.

With long-range charging, there's a loss of power transfer efficiency that occurs as the distance between the transmitter and the receiver is increased. That means devices charge more slowly when they're further away, and Apple is said to be aiming to overcome that limitation.

Apple has been hiring engineers with expertise in wireless charging, testing wireless charging modules, and has been seeking a supplier for wireless charging chips, all hints that point towards the imminent implementation of wireless charging. Still, it remains unknown how wireless charging will be implemented and whether Apple will partner up with a company like Energous to implement the feature.

Energous' CEO says the company's technology should be ready to start shipping out in real world products starting in the second quarter of 2017, but he did not comment on whether the partnership with Dialog was made in an attempt to secure some kind of deal with Apple.